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CMA Intermediate · Direct and Indirect Taxation · Deductions, Rebate and Relief

Meera, a resident individual, has a total income of Rs. 4,80,000 for the tax year. Income-tax computed on it before any rebate is Rs. 10,000. Under the rebate for resident individuals whose total income does not exceed Rs. 5,00,000, what is her tax payable after the rebate?

Her tax payable is nil. For a resident individual with total income up to Rs. 5,00,000, the rebate is 100% of the tax or Rs. 12,500, whichever is less. The tax of Rs. 10,000 is lower, so the whole tax is rebated.

  1. ARs. 10,000
  2. BRs. 2,500
  3. CNilCorrect
  4. DRs. 12,500

Explanation

The rebate is 100% of the income-tax payable or Rs. 12,500, whichever is less. Rs. 10,000 is less than Rs. 12,500, so the rebate is Rs. 10,000. Tax after the rebate is 10,000 - 10,000 = nil. Rs. 2,500 wrongly deducts the cap from the tax, and Rs. 12,500 ignores that the rebate cannot exceed the tax.

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